The Mortgage Bankers Association (MBA) reaffirmed its outlook for mortgage originations in the second half of 2013, but lowered its forecast for U.S. economic growth. MBA expects originations in the second half of the year to total $606 billion, up from the $527 billion it had forecast at the beginning of the year, but down considerably from the estimated $976 billion in originations during the first half of the year. The increase in the forecast is due almost entirely to carryover refinance loans originated during the second quarter that will close in the third quarter. Purchase loan originations during the second half of the year are expected to total $312 billion versus the $299 billion originally forecast.
MBA expects economic growth to average 2.2 percent in the second half of the year versus the 2.4 percent originally forecast, with the declines mainly due to reduced fixed residential investment and reduced government expenditures. MBA expects the unemployment rate to be at the 7.5 (third quarter) and 7.3 (fourth quarter) percent levels forecast at the beginning of the year but cautions that inflation over the next several months will be sharply higher due to higher oil prices and housing rental costs.
“As we said at the beginning of the year, the big unknown for origination volumes was the timing of the market reaction to any statements from Federal Reserve officials regarding the phasing out of quantitative easing and the impact on refinance volumes," said Jay Brinkmann, MBA’s chief economist. "While the magnitude of the rate increase was larger than we had forecast, the timing of the increase and the impact on refinance volumes was pretty much in line with what we had expected."
MBA expects the purchase mortgage rate as reported in the Freddie Mac weekly survey to average 4.4 during the third quarter and 4.7 percent during the fourth quarter, about 20 to 30 basis points higher than was forecast at the beginning of the year.